In November 2016, the Senate passed a series of the broad ranging superannuation reforms originally proposed in the Federal Budget.
The Treasury Laws Amendment (Fair And Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016 passed the Senate without amendment.
Summary of the changes:
- Introduce a $1.6 million cap on the amount of capital that can be transferred to the tax-free earnings retirement phase of superannuation
- From 1 July 2017 individuals with a superannuation balance of more than $1.6 million will no longer be eligible to make non-concessional (after tax) contributions
- Reduce the annual concessional contributions cap to $25,000 and the annual non-concessional contributions cap to $100,000 from 1 July 2017
- Remove the requirement that an individual must earn less than 10% of their income from employment activities to be able to claim a deduction for personal superannuation contributions from 1 July 2017
- Amend the earnings tax exemption on transition to retirement pensions
- Enable ‘catch-up’ concessional contributions from 1 July 2018 for people with super balances below $500,000
- Reduce the threshold at which high-income earners pay Division 293 tax on their concessional taxed contribution to superannuation to $250,000
- Remove the anti-detriment benefit provisions
- Extend the spouse superannuation tax offset
For more information on the tax impact of the changes, please contact the office today.